Projections for a Start Up Vaping Business Capstone Project

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Vape Nation Business Plan

Company Identification

Mission of the Company

Business Goals

Keys to Success

Company Summary

Industry History

Legal Form of Ownership

Location and Facilities

Management Structure

Products and Services

Market Analysis

Target Market

Industry Analysis

Market Strategy

Price List

Promotional Strategy

Sales Forecast

Implementation Strategy

Overall Strategy

Monitoring Plan

F. Financial Statements and Projections

F1. Forecasted Profit and Loss Statement

F2. Forecasted Balance Sheet

G. Financial Report

G1. Financial Projections

G2. Financial Position

G3. Estimated Capital/Investment Needs

Executive Summary

Suggested length of 1-2 pages

Company Identification:

Vape Nation, based in the U.S. in California is national start-up that expects to compete in the emerging vapor industry, utilizing vaping technology, e-liquids, and e-cigarettes to market itself to local, national, and online customers.

A2. Mission of the Company:

The mission of Vape Nation is to create brand awareness, brand loyalty, and capture market share in the emerging vaporizer market.

A3. Business Goals:

The primary purpose of Vape Nation is to record $100,000 in monthly sales revenue by the end of the first year of operation. This goal is based on the business model that Vape Nation has, which is to establish itself as the premier vaporizer technology provider, giving vapers a unique vaporizer experience with patented e-liquid flavors, patented vape technology, and optimal levels of service at local kiosks and via online distribution. The second business goal that Vape Nation has is to create an international following based on consumer brand loyalty that will launch Vape Nation as a compelling product, using strategic product placement, such as a sponsorship of alternative sports games like X-Games, where other merchants such as Red Bull have had exceptional success in developing brand loyalty.

Vape Nation seeks to the premier vape shop of choice among alternative "smokers" also known as vapers. The trend in vaping is skyrocketing around the world since the invention of the e-cigarette in 2003 and the spread of e-cigarette usage to Europe and to America has created a boom in the use of the device that has allowed hundreds of thousands to quit smoking traditional and harmful tobacco products.

Creating a sophisticated vape tech that individuals can use to obtain a quality vaping experience with enjoyable e-liquid juice is a the number one priority of Vape Nation, as it looks to become a dominant player in the vape market.

A4. Keys to Success:

The three keys to success for the company are to focus on strategic marketing, using direct marketing strategies and sponsorship strategies; to utilize Internet shopping/networking/distributing as a gateway to becoming more visible in the marketplace; and to establish localized kiosk-based centers for consumption in regions and markets where vaping legislation is permissible and supportive of the overall aims of the company. Currently, the UK market is much more receptive to vaping as a healthier alternative to smoking, as the FDA in the U.S. has recently discussed vaping in mainly negative terms that do not bode well for smaller, independent producers looking to expand. Fortunately our team has foundations in the UK as well, and w expect to establish a base in London with open-air kiosks going up around the UK throughout 2017.

B. Company Summary

Suggested length of 4-6 pages

B1. Industry History:

The history of the vaping industry is relatively new compared to the history of smoking traditional tobacco cigarettes. Vaping technology does not utilize tobacco, which is why it is healthier for consumers than smoking tobacco products (Public Health England, 2015). It uses a battery-powered heating coil that heats e-liquid, which can or cannot contain nicotine, as well as flavors to give the vapor a pleasant or appealing taste to the user. The water vapor is heated by the coil and the vape user drags on the product, just like smoking a pipe, except the only difference is that the vaper inhales water vapor rather than tobacco smoke (Allen et al., 2015). What is exhaled is the same water vapor -- so there is no danger of secondary smoke for others. Vaping, therefore, is not the same as smoking tobacco, as the components are completely different.

The concept of vaping first really began with e-cigarette technology, in which a person looking to quit smoking traditional tobacco products would use an electronic "cigarette" -- which is essentially the same as a vaporizer in the sense that no tobacco is actually used in the product. Instead, the smoker of the e-cigarette is given a dose of nicotine (the addictive variable in the tobacco product that stimulates the hook) and the "smoker" is able to engage in the "smoking" habit without actually inhaling any dangerous toxins or pollutants (as the e-cigarette does not burn real tobacco but uses battery to produce the "smoke vapor" effect just like in vaping technology).

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The industry first began in 2003 as a result of proprietary engineering by a designer in China, who developed the first electronic cigarette technology. The designer was Hon Lik and his company became Ruyan, which means "like smoke" in English -- an apt title for the company who first developed the device that allows users to mimic the act of smoking without actually smoking (Boseley, 2015).

By 2006, electronic cigarettes were being introduced into the West via Europe and the U.S. In the Middle East, however, as in Turkey (for example), the Health Ministry overseeing the importation and sale of electronic cigarettes deemed them harmful to users, highlighting the presence of nicotine as main reason (SA Transcripts, 2015). By 2008, the World Health Organization jumped on the prohibitory bandwagon when it announced that the e-cigarette was not substantial aid in the effort to limit or help people to stop smoking (WHO, 2008).

These claims have been countered by the UK's own Health Ministry, which reported in 2015 that vaporizers and e-cigarettes are 95% healthier than smoking traditional tobacco products precisely because tobacco is not used or smoked in the vaporizer product, thus making the inhaling of the water vapor not harmful (Public Health England, 2015). This publication by the UK government's medical community was a tremendous boon to the market in the UK and has facilitated the rise of the sector tremendously by giving it a lot of positive exposure and support as an alternative to smoking and for people looking to quit smoking traditional tobacco cigarettes.

Big Tobacco has also taken notice as it has developed its own line (or acquired other companies that have) of e-cigarettes and vaporizers to appeal to this growing segment of alternative vape technology users (SA Transcripts, 2015). With products like BLU on the shelves by major retailers, vaping has emerged out of the alternative, underground sub-culture of vape shops and lounges to the mainstream public. The recent filing by the FDA in the U.S. has shown that officials are still not willing to welcome vaping as a positive means of engaging in the "smoking" habit without harming one's body or polluting the air, thus making the U.S. a more difficult market to gain ground in when compared to the UK (Nather, Scott, 2016).

B2. Legal Form of Ownership:

The company will be a limited liability company (LLC) in the U.S. and in the UK. The articles of organization will include a statement of name, address, and members of the company. The company has been founded by a group of four individuals, all of whom have a collective net worth of over $100 million. Their passion for vaping stems from their love of counter-culture trends and their appreciation for alternative health products. At Vape Nation, we view e-cigarettes and vaporizers as being a great step forward for people looking to quit smoking and to lead healthier and more active lifestyles. We have incorporated our company as a limited liability company so as to mitigate the risk to our own personal and private equity/assets should the company fail to perform to our satisfaction and creditors seek remuneration.

B3. Location and Facilities:

The main headquarters will be in the U.S. (California), but as some members of the company are also in the UK, a base will be established there as well (London). The location of the U.S. facility is 112 Alamada St. in San Francisco, a four-story complex used for production of e-liquids, packaging, receiving of vaporizers/e-cig shipments (a train depot is nearby along with dockyards), and for storage and shipping processes. In the UK, the main location is Manilla St. near Canary Wharf, London, in a 3-story complex used for packaging and processing of shipments and used as the distribution site for kiosks throughout the UK. The facilities in both locations will utilize a team of 5-7 on-site workers, for processing shipping, packaging, inspection, management, outgoing deliveries, and inbound deliveries. The main dispensaries in the UK will be established in kiosk form, which is a non-traditional venue and allows for low cost operations in high foot-traffic areas where visual appeal and easy access can be obtained. The kiosk is not as popular in the U.S., where consumer culture is leaning more….....

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